Floor Plan Inventory Accounting

Floor planning is commonly used in new and used car dealerships.

Floor plan inventory accounting.

With floor plan financing you will work with a third party financing institution a floor plan financing company to. Floor planning is a type of inventory financing for large ticket retail items. The holding cost per unit per day is a useful metric that can help you keep your inventory balanced as well as determine how quickly you might need to turn a unit. This article reviews how you can manage floor plan financing with quickbooks.

These floor plan finance formulas incorporated with your turn time can help to make or break your dealership s profitability. The arrangement is most commonly used when large assets such as automobiles or household appliances are involved. And in a soft economy that can pose a serious problem both for the lender and the retailer. A floor plan is a method that a business such as an auto dealership can use to finance inventory that they are holding for resale without having to tie up their own capital in that inventory.

Retailers use a short term loan to purchase inventory items and the loan is repaid as inventory is sold. A longer turn time for inventory eats into cash flow. Floor planning is a method of financing inventory purchases where a lender pays for assets that have been ordered by a distributor or retailer and is paid back from the proceeds from the sale of these items.